SpaceX will lay off hundreds to ‘become a leaner company’

SpaceX plans to lay off approximately 10 percent of its workforce in order to manage its costs, the company confirmed to TechCrunch today. First reported by Ars Technica’s Eric Berger, the news comes as the company embarks on an ambitious plan to develop and test an interplanetary spacecraft while simultaneously performing frequent orbital launches.

In a statement provided to TechCrunch, SpaceX explained that the layoffs are in pursuit of becoming a “leaner company” and that they were only necessary due to “the extraordinarily difficult challenges ahead.”

To continue delivering for our customers and to succeed in developing interplanetary spacecraft and a global space-based Internet, SpaceX must become a leaner company. Either of these developments, even when attempted separately, have bankrupted other organizations. This means we must part ways with some talented and hardworking members of our team. We are grateful for everything they have accomplished and their commitment to SpaceX’s mission. This action is taken only due to the extraordinarily difficult challenges ahead and would not otherwise be necessary.

The company employed at least 7,000 people in late 2017 when COO Gwynne Shotwell last gave a number — which means around 700 will lose their jobs.

I asked SpaceX for more information on where these jobs might come from — engineering, manufacturing, sales, certain projects, etc — but apart from the statement the company did not offer any answers.

Layoffs of this scale ring alarm bells pretty much across the board, but the company has insisted that it is solvent and successful. And indeed even if it were not, it is hard to imagine that its extremely successful and increasingly reliable Falcon 9 launch vehicle would cease operations any time soon. In fact one might expect launch numbers to increase with financial difficulties in order to increase revenue.

Why such a major reduction in workforce, and why now? The company’s excuse of wanting to be lean doesn’t explain much; SpaceX can hardly have any fat to trim off it considering how young and small it is compared with other aerospace concerns, as well as the breadth of its services and research. It seems unlikely that there are hundreds of middle managers loafing their way to a paycheck. It’s far more likely SpaceX barely has enough employees to do what it already does.

But mounting costs may simply have caught up with SpaceX’s ambitions; it has, after all, been forging forward on multiple fronts, any single one of which would be more than enough for a single company.

It has been building and actively improving its Falcon 9 and Falcon Heavy launch vehicles for years, with the former now more or less in a final state but the latter far from it. It has been researching and prototyping an interplanetary spacecraft, formerly known as the BFR and now Starship. It is building and testing a crewed capsule intended to bring astronauts to the International Space Station. And it is planning a 400-strong constellation of satellites to deliver high speed internet connectivity at a global scale.

So it is perhaps understandable that despite raising $450 million in 2017 and having another round of a similar size rumored to be in negotiation right now, the money is pouring out just about as fast as investors can pour it in. Hundreds of millions in contracts help as well, but they bring costs and responsibilities with them. Its many projects hold the promise of riches, but require years of incubation and investment.

The most logical place to cut from would perhaps be the Falcon 9 development team; CEO Elon Musk indicated that large scale R&D on the platform was ending and being reallocated to the Falcon Heavy and Starship projects. Therefore there may well be designers and engineers who are more easy to part with than others. But that is merely speculation.

All this is just to say that SpaceX’s financials and operations are too complicated to write off major layoffs as simply due to revenue shortfalls or overzealous hiring. I have asked SpaceX for more details and will update this post if I hear back; in the meantime we are very likely to hear more from the company, or the talkative Musk, in the next few days.